Early settlement discount

Q: We have an arrangement with our supplier to pay his account, 2.5% discount on the 30th following the month of our purchases. Is this shariah compliant? If not, please explain in detail how we can rectify this arrangement so that we still enjoy the benefit of the discount.

A: This is not permissible. You rather conclude the sale on the discounted price and give the supplier your assurance that you will pay on the 30th of the month and not later.

And Allah Ta'ala (الله تعالى) knows best.


Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)